Many Americans are reliant on Social Security to fund at least part of their retirement, yet there’s a lot of confusion around the program that could prevent retirees and future retirees from making the most of their benefits.
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A recent AARP survey tested Americans on their knowledge of Social Security, and these were the most common misunderstandings.
Key Social Security Rules Most Americans Don’t Understand
Many Americans lack knowledge around the Social Security retirement age. The survey found that:
- 41% of Americans do not know the youngest age they can collect Social Security
- 66% do not know the age when they will receive maximum benefits
Yet, many Americans believe it’s important to know these ages:
- 74% said it’s important for Americans to understand the earliest age they can start receiving their Social Security retirement payments
- 84% said it’s important to understand the best age to start receiving benefits
Many Americans also lack knowledge about how spousal payments work. For example, 46% of Americans don’t know that divorced people can collect Social Security retirement benefits based on their former spouse’s work record if they were married for at least 10 years.
There is also confusion around how working affects Social Security benefits. Thirty percent of Americans falsely believe that if you work while receiving Social Security retirement benefits, your payments will be reduced and you will never get that money back, while an additional 40% don’t know if this is true or not.
“The majority of Americans are unsure of a lot in how Social Security works,” said Bill Sweeney, senior vice president of government affairs at AARP. “It’s a complicated program [and] it can be especially complicated for folks who have [unique] marital [or work] situations. We want people to be able to get the maximum Social Security benefit that works in their life situation.”
A lack of understanding can impact your ability to maximize your benefits.
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What Happens If the Trust Fund Runs Dry? Most Americans Don’t Know
The Social Security Administration projects that the Social Security trust fund will be exhausted in the next 10 years. While this will impact benefits, most Americans don’t know how.
If the trust fund is exhausted, 36% believe they will not receive payments at all and 28% don’t know how it will affect their payments. Contrary to popular belief, Social Security won’t disappear entirely if the trust fund is depleted. Benefits would be reduced — not eliminated.
“Part of why people are confused is that when they see headlines that say ‘Social Security is going broke,’ it scares people,” Sweeney said.
Americans should be planning ahead to save more in the event benefits are reduced, but they should not give into panic and speculation that they will not receive benefits at all. To protect your retirement, learn the facts, plan ahead and consider speaking with a financial advisor.
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This article originally appeared on GOBankingRates.com: Most Americans Get These 5 Social Security Facts Wrong — and It Could Cost Them
